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2020 China Government Work Report

Policies of Foreign Investment and SME

On May 22, 2020, the opening session of the three-session of the thirteen National People's Congress was held in the Great Hall of the people. Xi Jinping party and state leaders attended the conference. When Premier Li Keqiang made a report on the work of the government, he reviewed the work in 2019 and this year and made plans for the tasks in the next stage. The report points out the direction for the next economic work, in which we specially selected the following important contents to guide you to understand the policies on supporting the development of small and medium-sized enterprises and investment!

First, in terms of foreign investment, the report clearly points out that " Promoting higher-standard opening up and stabilizing the overall performance of foreign trade and foreign investment”. The basic content is, “Faced with changes in the external environment, we must stay committed to opening our door wider to the world, keep our industrial and supply chains stable, and make opening up a catalyst for reform and development. We will stabilize the overall performance of foreign trade. To help businesses get more orders and keep their employees on, we will increase credit supply, extend the coverage of export credit insurance, lower compliance costs for imports and exports, and support the domestic sale of export products. We will accelerate the growth of cross-border e-commerce and other new forms of business and enhance our international shipping capacity. We will advance a new round of trials for innovative development of trade in services. We will make good preparations for the third China International Import Expo, work actively to expand imports, and foster a large globally-oriented market of higher standards. We will step up the utilization of foreign capital. The negative list for foreign investment will be significantly shortened, while a negative list will also be drawn up for cross-border trade in services. We will grant greater autonomy in reform and opening up to pilot free trade zones, speed up the establishment of a free trade port in Hainan, open new pilot free trade zones and integrated bonded areas in the central and western regions, and launch further comprehensive trials on opening up the service sector. We will foster an enabling market environment in which all companies, Chinese and foreign, are treated as equals and engaged in fair competition. We will focus on quality in the joint pursuit of the Belt and Road Initiative. Staying committed to achieving shared growth through consultation and collaboration, we will uphold market principles and international rules, give full scope to enterprises as the main actors, and work with our BRI partners for mutually beneficial outcomes. We will guide the healthy development of the outbound investment. We will promote the liberalization and facilitation of trade and investment. We will firmly safeguard the multilateral trading regime, and actively participate in reform of the WTO. We will work for the signing of the Regional Comprehensive Economic Partnership, and advance free trade negotiations with Japan and the Republic of Korea as well as other countries. We will work with the United States to implement phase one China-US economic and trade agreement. China will continue to boost economic and trade cooperation with other countries to deliver mutual benefits.”

Secondly, in the enterprise development report at the meeting, it is expected to reduce the burden for enterprises by more than 2.5 trillion yuan in 2020. The tax reduction and fee reduction policies for enterprises must be implemented resolutely. At the same time, Premier Li Keqiang pointed out that " The deficit rate is planned to be arranged at over 3.6% in this year, the scale of the fiscal deficit increased by 1 trillion yuan over last year, and at the same time, a trillion yuan special national debt is issued to fight the epidemic. This is a special measure in a special period. All the above-mentioned 2 trillion yuan will be transferred to local governments, and a special transfer payment mechanism will be established. The funds will go directly to the basic level of cities and counties, directly benefiting enterprises and the people. They are mainly used to protect employment, basic people's livelihood, and the main body of the market, including supporting tax reduction and fee reduction, rent reduction, and interest rate reduction, expanding consumption and investment, strengthening the nature of public finance, and will never be withheld or misappropriated. "The government's determination to support enterprises and the preferential policies will be implemented practically soon.

In addition, the government's work report also pays special attention to the development of small and medium-sized micro-enterprises in the epidemic, and proposes the following supporting policies:

1. Increasing tax cuts and reduce fees by about 500 billion yuan. This year, we will continue to implement systems such as the reduction of VAT rates and enterprise endowment insurance rates.
2. Extending the time limit for implementing the policy of reducing taxes and fees. In the early stage, the policy of tax reduction and fee reduction due before June was introduced, and the implementation period was extended to the end of this year. The payment of income tax for small and micro enterprises and individual businesses will be postponed to next year.
3. Reducing industrial and commercial tariffs, broadband, and special line tariffs. The policy of reducing industrial and commercial electricity prices by 5% was extended to the end of this year. The average charge for broadband and dedicated lines will be reduced by 15%.
4. Reducing rent. To reduce the rent of state-owned real estate, encourage all kinds of owners to reduce or postpone the collection of rent, and provide policy support.
5. Extending the policy of delayed repayment of principal and interest again. The loan extension policy for SMEs will be extended to the end of March next year. The loan for inclusive SMEs should be extended if possible, and the loan negotiation for other difficult enterprises should be extended.
6. Increasing loans. Encourage banks to substantially increase credit loans, first loans, and non-repayment loans for small and micro-enterprises. The loan growth rate of inclusive small and micro enterprises of large commercial banks is higher than 40%.
7. Handling the whole process of enterprise establishment online. We will promote more services to be handled in one network so that enterprises can handle all business online.
8. Relaxing the restrictions on registered business places. We will relax the restrictions on the places where small and micro enterprises and individual businesses can register and operate and facilitate entrepreneurs of all kinds to register and operate, and enjoy timely support policies.

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